Uber’s reputation risk management in the midst of trying times

These are difficult days for Uber Technologies Inc. In recent weeks, the San Francisco-based online transportation network company has been hit with a series of very public setbacks.

The incidents include a Feb. 19 blog post by a former engineer, Susan Fowler, who said that the company’s human resources division failed to respond to her complaints about sexual harassment; and the sudden departure of a recently hired senior vice president of engineering, Amit Singhal, reportedly for failing to inform Uber about a “credible” sexual harassment made against him while he was at Google Inc.

Additionally, Uber CEO Travis Kalanick, who quit President Donald Trump’s economic advisory council following protests from staff members, was also recorded having an argument with an Uber driver over falling fares.

Mr. Kalanick sent out a companywide email saying that the company had hired former U.S. Attorney General Eric Holder and Tammy Albarran, both partners at Washington-based law firm Covington & Burling L.L.P., to investigate the sexual harassment allegations. A spokesman for the law firm declined to comment.

Uber did not respond to requests for comment, and two emails sent to an address listed on Mr. Singhal’s blog did not receive a response.

Attorneys and industry analysts say that companies may face challenges when attempting to learn about a new employee’s background.

“Employers like Google have lots of legal risks and reputational risks themselves if they divulge too much information or information that happens to be incorrect,” said David Phippen, senior counsel with Constangy, Brooks, Smith & Prophete L.L.P., in Fairfax, Virginia. “It’s not a court decision, it’s not an arbitration decision, it’s not a finding by an independent judger of fact whether or not the guy did or didn’t do it, and there are risks if one says much about it.”

Mr. Phippen said a background check can cover formal records, such as potentially criminal records, court records, driving records and credit checks, “but they still won’t produce much in the way of records of informal events that never got to paper externally anywhere.”

“Risk managers should try to have in place policies and procedures that at least promote due diligence that attempt to get reasonable sets of facts without invading people’s privacy so that the right decisions can be made on both the business standpoint and a legal standpoint — and one of the business standpoints to some extent is the public relations issue,” he said.

Andrew Foose, vice president of advisory services for Navex Global Inc. in Washington, said companies, fearing lawsuits, only give out basic information about an employee when asked about them, but the hiring firm should still try to find out as much as it can about a prospective employee, particularly for senior management.

“It’s a much higher-risk position,” he said, “so they should be willing to invest more time and effort into that, including maybe reaching out to executives at the former employer and saying, ‘We realize your standard policy is not to do this, but given the level of this person, we’re hoping you’d be willing to have a conversation with us,’ and at least being able to show they made that extra effort and didn’t just work through the regular HR channels.”

While interviewing job candidates, Mr. Foose advises employers to ask them directly if they have been accused of misconduct or violating company policy in any way.

“You should ask that pointed question so that you can get an answer from someone and not just be at the mercy of their ability to smooth over particular issues,” he said. “It’s much easier to say to someone later you were dishonest and that’s why we’re firing you — just as you would if someone falsified their professional credentials or degrees that they have.”

Mr. Foose warned of negligent referral lawsuits, where a former employer may be sued if they knowingly let another company hire a bad employee.

Tracey Diamond, counsel with Pepper Hamilton L.L.P. in Philadelphia, said companies can also leave themselves open to charges of negligent hiring if they don’t do a good job of vetting candidates and bring in someone who commits a crime or creates an unsafe work environment.

“But there are a lot of challenges that employers face in trying to get that information,” she said. “People have to lead from the top down and you have to have management tie-in or this will just window dressing.”

She advised making acting professional in the workplace one of the metrics in the evaluation process.

“So someone might be a great sales performer,” she said. “They’re making their numbers and they’re bringing in lots of business. But if they’re harassing all their subordinates, that has to be something that is taken into consideration to avoid the potential liability for a sexual harassment lawsuit.”

Clearly, the company has much work to do to improve its image. Ira Kalb, assistant professor of clinical marketing at USC Marshall School of Business in Los Angeles, said Uber should employ a fact procedure where they admit and apologize for the situation; limit the scope of the incidents and put them in perspective; and propose a solution to show that these incidents will not occur again.

He also said he was not surprised by the situation at Uber.

“It doesn’t surprise me for two reasons,” he said “One is that Uber is a disruptive company; they’ve disrupted a bunch of industries and people are kind of gunning for them. The other reason is that the people at Uber have a reputation for being young and smart, but also arrogant. And when you’re young and smart and arrogant, these things aren’t going to bother you until it blows up in the media. They need what I would call some adult supervision — either on their board or in the management of the company.”